Compared to a barter economy, using money increases efficiency by reducing
A) transaction costs.
B) the need to exchange goods.
C) the need to specialize.
D) inflation.

Question

Quizplus · Accepted Answer

In a barter economy, goods and services must be directly exchanged, which increases transaction costs, such as the time and effort required to find a suitable trading partner and agree on the terms of exchange. The use of money reduces transaction costs by acting as a medium of exchange, allowing for indirect exchange and mitigating the need to search for a suitable trading partner.

Compared to a Barter Economy, Using Money Increases Efficiency by Reducing